WASHINGTON – The proposed financial reform bill backed by Democrats ran into a significant roadblock Friday with all 41 Republican senators signing a letter to Senate Majority Leader Harry Reid in opposition to the measure.
The latest partisan congressional fight comes as the Democratic majority is preparing to bring the financial reform bill to the floor of the Senate over the next week or two, and threatens the viability of the effort. That’s because even though the Democrats have a healthy 18-vote majority, the 41 Republicans could block a vote by filibuster. The letter does not say the Republicans will go as far as to filibuster the bill.
The Republicans said they oppose the plan to create a “too-big-to-fail” scheme that would require the nation’s largest financial institutions to fund the bailout of the next mega financial institutions. The Republicans said they believe the scheme should include Fannie Mae and Freddie Mac, the two government sponsored enterprises that have been run under federal conservatorship since September 2008.
The Republicans also are opposed to plans for a consumer financial products agency and regulation of the financial derivatives markets, both key features of the Democrats’ bill. Wall Street firms are lobbying heavily to eliminate both features from the bill.
The focus of the bill is a $50 billion fund that would be raised from assessments on large financial firms and used to liquidate future failures of big financial entities that pose a threat to the financial system. The Republicans are calling the assessment a “bailout bill for Wall Street.” Obama administration officials, who support the legislation, were reported last week to be reconsidering the funds to call for a collection of the assessment after a company has failed and been dismantled.
The bill has little for credit unions. The credit union lobby has already succeeded in exempting all but three credit unions with more than $10 billion in assets from examinations by the consumer financial protection agency, and in getting all credit unions exempt from contributing to the so-called too-big-to-fail fund.
